The government in effect outsources the operation of 16 British rail routes to privately owned companies. On most franchises, it gives operators a multi-million pound subsidy to help pay charges for using the tracks, which are levied by Network Rail, the owner of Britain's tracks, signals and stations.

Don't some operators have to pay the government?

On a growing number of franchises, the government demands an annual payment because the route is supposed to be profitable. The main examples are the east coast franchise, First Great Western, which is committed to pay £1.1bn, and South West Trains, which must pay £1.2bn. FGW's payments are now being topped up by the taxpayer because it is missing turnover targets. SWT is locked in an increasingly bitter dispute with the DfT over the terms of its franchise.

What has gone wrong?

It is clear that the rail franchise market is under strain because private operators are struggling with the financial obligations in their contracts.

What does it mean for passengers?

Despite all this, passengers and services will not be affected. National Express will continue to operate a full east coast service until a £40m loan runs out, likely to happen in the final quarter of this year. The DfT said it would then take control of the franchise, putting it into a public company created by the department.